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To deal with the expected profit drop, Volkswagen
has announced that it will ask its joint ventures in China to cut their
cost by 4.1 billion yuan (500 million US dollars) by the end of 2005.
Last week, Chief Financial Officer Hans-Dieter Poetsch of Volkswagen
said that the company would not be able to meet the profit level of last
year in China.
"The drop is due to the tough domestic sales environment, "explained
Yang Qing, a senior PR officer with Volkswagen China. "It is also related
to the currency factor."
Industry figures showed that Volkswagen's sales in China dropped
slightly in the first half of this year. The company sold about 310,000
cars, down 4.2 percent from a year earlier.
Meanwhile, China's auto market is slowing. China's sedan car sales dropped for three
consecutive months in the second quarter of 2004, although sales rebounded
slightly in July.
"The losses from foreign-exchange rates also contribute to the drop in
profits," said Yang. As some auto parts of Volkswagen are purchased in the
international market, with the mounting exchange rates between Chinese RMB
and euro, the production costs have been rising.
To retain the profit, Volkswagen has carried out a "ForMotion" project
worldwide to promote the cost saving. Part of the plan is cutting costs in
China.
Also during the first half, General Motors' mainland
operations,Volkswagen's main rival in China, reported the sales of 260,000
vehicles, an increase of 57.6 percent year on year.
Being satisfied with the company's operation, Phil Murtaugh, Chairman
and CEO of GM China said he is confident of the GM's performance in the
second half of the year.
(Xinhua) | 
Updated: 2004-08-24 14:57
